Some thoughts to guide future business investments

January 27, 2011

My apologies for being absent from the blog posting world for many months – it has been a busy time, and H2 of 2010 was particularly busy for my business.

Because I get asked for advice on all sorts of topics, I’ve decided to put some pointers/tips/hints/advice all in the one easy to find place.


Some great quotes to consider, when creating the vision of your next business venture:

1. Revenue is vanity, Profit is sanity.

2. Your business idea …. If It Doesn’t Spread, It’s Dead.

3. Businesses take note …. The youth of today don’t wake up thinking about your brand.  Stop trying to buy their attention, because nowadays you have to earn it.

In a future blog posting during H1 of 2011, I will explore each of the 3 points above in more detail.


Some great links to check out, to help formulate the details about what your next business venture will be:

1. http://anthillonline.com/5-reasons-your-problems-arent-being-solved-and-5-ways-to-solve-them/

2. Bessemer Venture Partners acknowledged some of their big “misses” from the past  http://www.bvp.com/Portfolio/AntiPortfolio.aspx

3. 100 Best Small Business Podcasts  http://www.smbtrendwire.com/2010/03/01/100-best-small-business-podcasts-2010/

Some interesting technology statistics from the end of 2010 that your next business venture should be looking to exploit:

  • In the US today (2010), text messages outnumber phone calls
  • Globally, 95% of all text messages are read within 15 Minutes
  • Over 20% of people respond to a text message
  • Globally, twice as many people use text messaging as use email
  • Over 2 billion people have mobile internet access
  • 1.8 billion people will send at least 1 text message today

Some “scary” societal/economic statistics from the end of 2010 that represent some of the imbalances we should be trying to address:

  • China has 140 cities with 1+ Million residents, the whole of Europe has 35 !!!
  • The US is 4% of the total world population, but each year consumes 60% of the worlds total savings !!!
  • In Europe in 2010, there are 4 workers per retiree.  In Europe in 2050, there will be 2 workers per retiree !!!
  • In China, in 2050, there will be 450 Million people aged 60+; there will also be 100 Million people aged 80+.
  • In the US today (2010), 40% of all adults aged 50-65 are already experiencing difficulty with basic activities like walking, and climbing steps.
  • In the US today (2010) 1% of Americans received 25% of ALL personal income, this is also more than the bottom 50% of households put together.

Feel free to contact us, if you want more information, or want to discuss how your business might be able to take account of these trends to create a better business plan and a more sustainable business for the future.

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Receivables Management for managing Business Cashflow.

March 27, 2010

I’ve talked with many businesses over the years about the benefits of Receivables Management as a tool to leverage cashflows.  Receivables Management is also known as “Debtor Finance” and more commonly as “Factoring”, which is a particular form of Receivables Management.

You can learn a little bit more about the basics of Debtor Financing at http://en.wikipedia.org/wiki/Debtor_finance which may answer some basic questions that I don’t address here.

Please feel free to contact me if you want more information on this topic, or want help accessing Debtor Financing as an option for your business.

As I mentioned, a term used to mean Debtor Financing or Receivables Management is Factoring.  This still has a dirty name for many people who remember the ridiculous interest rates businesses were being charged to access this type of facility back in the 1980’s and 1990’s.

Rest assured that in todays financial markets Debtor Financing is much more cost effective for businesses.  Typically the cost to a business is 200-250 basis points (2.0%-2.5%) above the benchmark lending rates.

So, why would you use Debtor Financing ?.  Well, the most obvious answers are:

  • You’ve issued an invoice to a customer and now have to wait 30/45/60/90 days until you get those funds.
  • If your customers are late paying, or go delinquent, you will wait even longer.
  • If you could get 70% of the money due in 30 days today, and only pay 6.5% for the privilege what sort of a return to the business can you make ?.  If it is less than 6.5% then you shouldn’t be in business … it should be more like 20% to 50%.

PLEASE NOTE: The banks don’t just give this away for nothing.  They will do an assessment of the Invoices you are proposing to use and will decide which ones they will accept (or not accept).

In the Australian marketplace there used to be a number of financial institutions offering Debtor Financing, with ANZ and NAB being the top 2 with very attractive offerings.

Unfortunately as at the end of 2009, ANZ withdrew from this market for new business customers.  However, NAB are still in this market and have over a 50% market share.

This means that:

  • They’re committed to Debtor Financing as a tool for their business customers;
  • The NAB Business Bankers understand how this tool can be made to work for their customers; and
  • When they approve of an Invoice you want to use for Debtor Financing that means they’re willing to work with you in risk-managing those Accounts Receivable.

Here is a link to the NAB Debtor Financing facility in case you would like to know more http://www.nab.com.au/wps/wcm/connect/nab/nab/home/business_solutions/3/1/2

I’ve provided a small précis below.

NAB Debtor Financing:

Suited to businesses that need a capital injection to fund business growth, or cash flow requirements, but want to fund this purely on the strength of their business sales.

What are the Benefits:

  • Funds access: borrow money based on the strength of your business sales
  • Flexibility: helping you manage seasonal and day-to-day fluctuations in cash flow
  • Convenience: ability to gain access to funds when you need it against issued invoices.
  • Limit: as your business grows and your debtors grow so does your facility
  • Accessibility:   transfer funds from your NAB Debtor Finance account into your working account via NAB Online Business and NAB Online Corporate, or by written instruction

What are the Features:

  • Credit limit based on business sales, not mortgage based fixed asset lending like all the other options available to businesses
  • Withdrawals can be made from your NAB Debtor Finance account up to your daily available limit (which automatically increases/decreases depending on the level of your sales and debtor collections).
  • No account keeping fee
  • No line service fee